2021 2021 Interim Report - Essex Bio-Technology
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2021 中期報告 2021 Interim
Report
INTERIM REPORT 2021 中期報告
CONTENTS
2 Condensed Consolidated Statement of
Profit or Loss and Other Comprehensive Income
3 Condensed Consolidated Statement of
Financial Position
4 Condensed Consolidated Statement of
Changes in Equity
5 Condensed Consolidated Statement of
Cash Flows
7 Notes to the Interim Condensed Consolidated
Financial Statements
24 Management Discussion and Analysis
38 Additional Information
42 Corporate InformationThe board (the “Board”) of directors (the “Directors”) of Essex Bio-Technology Limited (the “Company”)
presents the unaudited interim condensed consolidated financial statements of the Company and its subsidiaries
(collectively, the “Group”) for the six months ended 30 June 2021 together with the comparative figures for the
corresponding period in 2020 and the relevant explanatory notes as set out below.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
Notes HK$’000 HK$’000
Turnover 4&5 737,374 323,835
Cost of sales (114,680) (69,125)
Gross profit 622,694 254,710
Other revenue, and other gains and losses 6 12,083 15,747
Distribution and selling expenses (377,280) (163,537)
Administrative expenses (69,061) (45,749)
Finance costs 7 (5,362) (3,381)
Profit before income tax 8 183,074 57,790
Income tax 9 (20,888) (8,602)
Profit for the period 162,186 49,188
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of financial statements of
foreign operations 18,586 (27,261)
Items that will not be reclassified subsequently to profit or loss:
Changes in fair value of equity instruments at fair value
through other comprehensive income (560) (19,101)
Other comprehensive income for the period 18,026 (46,362)
Total comprehensive income for the period 180,212 2,826
Earnings per share attributable to owners of the Company
Basic 11 HK28.12 cents HK8.51 cents
Diluted 11 HK27.38 cents HK8.51 cents
2
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
Notes HK$’000 HK$’000
Non-current assets
Property, plant and equipment 12 297,850 272,947
Right-of-use assets 5,771 6,800
Land use rights 16,886 16,868
Goodwill 24,276 24,153
Other intangible assets 13 660,781 585,793
Convertible loan receivables 14 58,945 42,434
Financial assets at fair value through
other comprehensive income 15 78,489 78,574
Financial assets at fair value through profit or loss 15 7,470 6,338
Deposits and prepayments 18 57,740 54,577
Total non-current assets 1,208,208 1,088,484
Current assets
Inventories 16 126,063 147,036
Trade and other receivables 17 543,182 483,254
Deposits and prepayments 18 13,807 29,702
Convertible loan receivables 14 32,415 32,916
Financial assets at fair value through profit or loss 15 23 15
Pledged bank deposit 36,825 40,150
Cash and cash equivalents 657,754 599,782
Total current assets 1,410,069 1,332,855
Total assets 2,618,277 2,421,339
Current liabilities
Trade and other payables 19 412,145 396,893
Bank borrowings 20 185,929 200,750
Lease liabilities 2,393 2,258
Current tax liabilities 43,627 6,124
Total current liabilities 644,094 606,025
Net current assets 765,975 726,830
Total assets less current liabilities 1,974,183 1,815,314
Non-current liabilities
Bank borrowings 20 228,026 214,074
Lease liabilities 3,986 5,162
Convertible loan payable 21 141,770 140,529
Deferred tax liabilities 23,048 29,358
Total non-current liabilities 396,830 389,123
Total liabilities 1,040,924 995,148
NET ASSETS 1,577,353 1,426,191
Capital and reserves attributable to owners of the Company
Share capital 22 57,672 57,690
Reserves 1,519,681 1,368,501
TOTAL EQUITY 1,577,353 1,426,191
3
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the Company
Fair value Conversion
through component
Foreign other of
Statutory currency Share comprehensive convertible
Share Share Capital surplus translation option income Fair value loan Retained
capital premium reserve reserve reserve reserve reserve reserve payable earnings Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2020 57,794 71,108 362 79,167 (53,654) 4,654 6,983 – 33,323 997,408 1,197,145
Profit for the period – – – – – – – – – 49,188 49,188
Other comprehensive income:
– Changes in fair value of equity
instruments at fair value through
other comprehensive income – – – – – – (19,101) – – – (19,101)
– Exchange differences on translation of
financial statements of foreign operations – – – – (27,261) – – – – – (27,261)
Total comprehensive income for the period – – – – (27,261) – (19,101) – – 49,188 2,826
Appropriation of profits – – – 8,400 – – – – – (8,400) –
Dividend paid – – – – – – – – – (28,897) (28,897)
Equity-settled share-based payments – – – – – 434 – – – – 434
Transfer of fair value reserve
upon the disposal of equity
instruments at fair value through
other comprehensive income – – – – – – (1,611) – – 1,611 –
At 30 June 2020 (Unaudited) 57,794 71,108 362 87,567 (80,915) 5,088 (13,729) – 33,323 1,010,910 1,171,508
At 1 January 2021 57,690 71,106 362 90,683 24,536 4,535 (31,266) 18,096 15,227 1,175,222 1,426,191
Profit for the period – – – – – – – – – 162,186 162,186
Other comprehensive income:
– Changes in fair value of equity
instruments at fair value through
other comprehensive income – – – – – – (560) – – – (560)
– Exchange differences on translation of
financial statements of foreign operations – – – – 18,586 – – – – – 18,586
Total comprehensive income for the period – – – – 18,586 – (560) – – 162,186 180,212
Dividend paid – – – – – – – – – (28,824) (28,824)
Exercise of share options 32 2,190 – – – (334) – – – – 1,888
Equity-settled share-based payments – – – – – 175 – – – – 175
Shares repurchased and cancelled (50) (1) – – – – – – – (2,238) (2,289)
At 30 June 2021 (Unaudited) 57,672 73,295 362 90,683 43,122 4,376 (31,826) 18,096 15,227 1,306,346 1,577,353
4
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
Notes HK$’000 HK$’000
Cash flows from operating activities
Profit before income tax 183,074 57,790
Adjustments for:
Interest income from convertible loan receivables 6 (1,488) (944)
Interest income from bank deposits 6 (1,623) (2,823)
Change in fair value of financial assets at fair value
through profit or loss 6 1,390 (7,959)
Impairment loss on trade receivables 6 – 2,207
Finance costs 7 5,362 3,381
Amortisation of land use rights 8 199 183
Amortisation of other intangible assets 8 5,353 3,381
Depreciation of property, plant and equipment 8 9,750 8,438
Depreciation of right-of-use assets 8 1,114 1,190
Equity-settled share-based payments 175 434
Exchange (gains)/losses, net 8 (385) 741
Gain on disposal of property, plant and equipment 8 (8) (7)
Write-off of inventories 8 2,243 1,489
Operating cash flows before working capital changes 205,156 67,501
Increase in inventories (20,206) (10,116)
(Increase)/decrease in trade and other receivables (52,091) 169,020
Decrease/(increase) in deposits and prepayments 16,163 (368)
Increase/(decrease) in trade and other payables 50,893 (136,639)
Cash generated from operations 199,915 89,398
Tax refunded/(paid) 9,909 (31,570)
Net cash generated from operating activities 209,824 57,828
Cash flows from investing activities
Acquisition of property, plant and equipment (28,279) (23,977)
Deposits paid for acquisition of property, plant and equipment (4,925) (8,703)
Deposits paid for acquisition of other intangible assets – (5,519)
Increase in other intangible assets (73,246) (40,714)
Acquisition of a subsidiary – (2,173)
Purchase of convertible loan receivables (15,140) (16,555)
Purchase of financial assets at fair value through other
comprehensive income – (1,379)
Purchase of financial assets at fair value through profit or loss (2,936) –
Bank interest received 1,623 2,823
Decrease in pledged bank deposit 3,325 1,925
Proceeds from disposal of property, plant and equipment 115 148
Proceeds from disposal of financial assets at fair value
through other comprehensive income – 5,536
Net cash used in investing activities (119,463) (88,588)
5
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
HK$’000 HK$’000
Cash flows from financing activities
Proceeds from bank borrowings 15,450 –
Repayments of bank borrowings (16,625) (9,625)
Payment of lease liabilities (1,228) (1,233)
Proceeds from shares issued under share option scheme 1,888 –
Payments for shares bought back (2,289) –
Interest paid on bank borrowings (4,619) (2,759)
Interest paid on convertible loan payable (1,441) (1,441)
Dividends paid to owners of the Company (28,824) (28,897)
Net cash used in financing activities (37,688) (43,955)
Net increase/(decrease) in cash and cash equivalents 52,673 (74,715)
Cash and cash equivalents at beginning of period 599,782 473,341
Effect of foreign exchange rate changes on cash
and cash equivalents 5,299 (8,238)
Cash and cash equivalents at end of period 657,754 390,388
Analysis of balances of cash and cash equivalents
Cash and bank balances 408,727 307,622
Non-pledged time deposits with original maturity
of less than three months when acquired 249,027 82,766
Cash and cash equivalents as stated in the condensed
consolidated statement of financial position and the
condensed consolidated statement of cash flows 657,754 390,388
6
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. GENERAL
Essex Bio-Technology Limited is a limited liability company incorporated in the Cayman Islands on 31 July 2000 under
Companies Law Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands. Its shares are listed on
the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (Stock code: 1061). The address
of its registered office is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. Its
principal place of business is located at Room 2818, China Merchants Tower, Shun Tak Centre, 168–200 Connaught
Road Central, Hong Kong.
The Group, comprising the Company and its subsidiaries, is principally engaged in investment holding, and
development, manufacture and sale of biologic drugs in the People’s Republic of China (the “PRC”).
2. BASIS OF PREPARATION
These interim condensed consolidated financial statements for the six months ended 30 June 2021 have been prepared
in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of
Certified Public Accountants (the “HKICPA”) and the applicable disclosures required by the Rules Governing the Listing
of Securities on the Stock Exchange.
These interim condensed consolidated financial statements are presented in Hong Kong Dollars (“HK$”), unless
otherwise stated, and should be read in conjunction with the Group’s annual financial statements for the year ended 31
December 2020 (the “2020 Financial Statements”), which have been prepared in accordance with Hong Kong Financial
Reporting Standards (“HKFRSs”) issued by the HKICPA.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual
earnings.
3. ACCOUNTING POLICIES
The accounting policies adopted in the preparation of these interim condensed consolidated financial statements
are consistent with those followed in the preparation of the 2020 Financial Statements, except for the adoption of
amendments to HKFRS 16 effective for annual periods beginning on or after 1 June 2020. The adoption of this amended
standard has no material impact on the Group’s interim condensed consolidated financial statements. The Group has
not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
7
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 20214. SEGMENT REPORTING
The Group manages its businesses by business lines. The segment information is reported internally to the chief
operating decision-maker (i.e. executive Directors) for the purposes of resource allocation and performance assessment.
The Group’s reportable and operating segments for financial reporting purposes are as follows:
– Ophthalmology
– Surgical
(a) Reportable segments
The chief operating decision-maker monitors the results of its business units separately for the purpose of
making decision about resources allocation and performance assessment. Segment performance is evaluated
based on the results from the reportable segments as explained in the table below.
For the six months ended 30 June 2021
Ophthalmology Surgical Total
(Unaudited) (Unaudited) (Unaudited)
HK$’000 HK$’000 HK$’000
Reportable segment revenue
– Revenue from external customers 294,013 443,361 737,374
Reportable segment profit 87,343 131,369 218,712
For the six months ended 30 June 2020
Ophthalmology Surgical Total
(Unaudited) (Unaudited) (Unaudited)
HK$’000 HK$’000 HK$’000
Reportable segment revenue
– Revenue from external customers 146,048 177,787 323,835
Reportable segment profit 32,695 36,972 69,667
The totals presented for the Group’s operating segments were reconciled to the Group’s key financial figures as
presented in the interim condensed consolidated financial statements as follows:
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
HK$’000 HK$’000
Reportable segment profit 218,712 69,667
Unallocated corporate income and expenses, net (28,711) (16,021)
Change in fair value of financial assets at fair value
through profit or loss (“FVTPL”) (1,390) 7,959
Equity-settled share-based payments (175) (434)
Finance costs (5,362) (3,381)
Profit before income tax 183,074 57,790
Major corporate expenses comprised mainly the staff costs including Directors’ emoluments.
Analysis of segment assets and liabilities has not been presented as the measure of segment assets and
liabilities is not regularly provided to the executive Directors.
8
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 20214. SEGMENT REPORTING (CONTINUED)
(b) Geographical information
(i) Revenue from external customers
For the six months ended 30 June 2021 and 2020, the Group’s revenue from external customers is
derived solely from its operations in the PRC (place of domicile).
(ii) Non-current assets
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
PRC 875,339 781,123
Hong Kong 180,814 172,771
Overseas 7,151 7,244
1,063,304 961,138
The non-current asset information above excludes convertible loan receivables, financial assets at fair
value through other comprehensive income (“FVTOCI”) and financial assets at FVTPL, and is based on
the physical locations of the respective assets, except for goodwill and other intangible assets of which is
based on the area of the group entities’ operations.
(c) Information about a major customer
For the six months ended 30 June 2021, revenue of HK$169.9 million (For the six months ended 30 June 2020:
HK$78.2 million) was derived from sales to one (For the six months ended 30 June 2020: one) customer, which
individually accounted for over 10% of the Group’s total revenue.
5. TURNOVER
Turnover represents the sales value of goods supplied to customers and service income (net of sales tax, value-added
tax, commercial discounts and sales returns), further details of which are set out in note 4.
6. OTHER REVENUE, AND OTHER GAINS AND LOSSES
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
HK$’000 HK$’000
Interest income from convertible loan receivables 1,488 944
Government grants 4,762 2,871
Interest income from bank deposits 1,623 2,823
Sundry income 2,799 780
Change in fair value of financial assets at FVTPL (1,390) 7,959
Licensing income 2,801 2,577
Impairment loss on trade receivables – (2,207)
12,083 15,747
9
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 20217. FINANCE COSTS
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
HK$’000 HK$’000
Interest expense on bank borrowings 4,619 2,759
Interest expense on lease liabilities 95 114
Imputed interest expense on convertible loan payable 2,682 4,465
Less: Amount capitalised (2,034) (3,957)
5,362 3,381
8. PROFIT BEFORE INCOME TAX
This is arrived at after charging/(crediting):
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
HK$’000 HK$’000
Amortisation of land use rights 199 183
Amortisation of other intangible assets 5,353 3,381
Auditor’s remuneration 630 620
Cost of inventories 71,291 50,351
Cost of services 41,146 17,285
Depreciation of property, plant and equipment 9,750 8,438
Depreciation of right-of-use assets 1,114 1,190
Employee costs excluding Directors’ emoluments:
– Salaries and other benefits 141,235 86,079
– Pension fund contributions 5,506 1,291
– Equity-settled share-based payments to the employees 175 306
Equity-settled share-based payments to the consultant of the Group – 128
Exchange (gains)/losses, net (385) 741
Research and development costs recognised as expenses 11,080 2,960
Write-off of inventories 2,243 1,489
Gain on disposal of property, plant and equipment (8) (7)
9. INCOME TAX
No provision for Hong Kong profits tax has been made as the Group has no assessable profit arising in Hong Kong.
The Group’s major operating subsidiary in Zhuhai, the PRC, was established and carries on business in the Special
Economic Zones of the PRC as a high technology enterprise. This subsidiary has obtained a 高新技術企業證書 (High
Technology Enterprise Certificate) and is entitled to enjoy the enterprise income tax at the concessionary rate of 15%.
Enterprise income tax rate of 25%, 17% and 27.3% is applied to the Group’s other operating subsidiaries in the PRC,
Singapore and the United States respectively.
Income tax for the six months ended 30 June 2021 included an overprovision of approximately HK$10.0 million in last
year.
10
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202110. DIVIDENDS
The Board has resolved on 12 August 2021 to declare an interim dividend of HK$0.04 (For the six months ended 30
June 2020: Nil) per ordinary share for the six months ended 30 June 2021, which is payable in cash.
11. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share attributable to owners of the Company is based on the
following data:
Earnings
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
HK$’000 HK$’000
Profit attributable to owners of the Company for
the purposes of calculating basic earnings per share 162,186 49,188
Interest expense on convertible loan payable 2,682 N/A
Profit attributable to owners of the Company for
the purposes of calculating diluted earnings per share 164,868 49,188
Number of shares
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
Weighted average number of ordinary shares for
the purposes of calculating basic earnings per share 576,669,061 577,937,000
Effect of dilutive potential ordinary shares:
– convertible loan payable 25,423,728 N/A
Weighted average number of ordinary shares for
the purposes of calculating diluted earnings per share 602,092,789 577,937,000
The computation of diluted earnings per share for the six months ended 30 June 2021 does not assume the issue of
potential ordinary shares in relation to all share options granted as they have anti-dilutive effect.
The computation of diluted earnings per share for the six months ended 30 June 2020 did not assume the issue of
potential ordinary shares in relation to all share options granted and the conversion of convertible loan payable as they
had anti-dilutive effect.
11
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202112. PROPERTY, PLANT AND EQUIPMENT
Buildings Furniture,
and leasehold Plant and fixtures and Motor Construction
improvements machinery equipment vehicles in progress Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Cost:
At 1 January 2020 116,595 91,547 27,693 6,041 14,655 256,531
Additions – 4,186 10,504 – 80,307 94,997
Acquisition of a subsidiary – – 83 492 – 575
Disposals (252) (133) (130) – – (515)
Exchange adjustment 6,638 5,453 2,112 332 5,379 19,914
At 31 December 2020 122,981 101,053 40,262 6,865 100,341 371,502
Additions – 556 3,578 – 27,065 31,199
Disposals – (143) (496) (198) – (837)
Exchange adjustment 1,587 1,305 508 62 1,369 4,831
At 30 June 2021 (Unaudited) 124,568 102,771 43,852 6,729 128,775 406,695
Accumulated depreciation:
At 1 January 2020 13,659 47,215 11,396 3,900 – 76,170
Charge for the year 2,330 10,064 4,151 529 – 17,074
Acquisition of a subsidiary – – 83 242 – 325
Disposals (34) (111) (125) – – (270)
Exchange adjustment 909 3,257 848 242 – 5,256
At 31 December 2020 16,864 60,425 16,353 4,913 – 98,555
Charge for the period 1,242 5,404 2,834 270 – 9,750
Disposals – (59) (493) (178) – (730)
Exchange adjustment 221 794 206 49 – 1,270
At 30 June 2021 (Unaudited) 18,327 66,564 18,900 5,054 – 108,845
Carrying amount:
At 30 June 2021 (Unaudited) 106,241 36,207 24,952 1,675 128,775 297,850
At 31 December 2020 (Audited) 106,117 40,628 23,909 1,952 100,341 272,947
12
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202113. OTHER INTANGIBLE ASSETS
Acquired
Development intangible
expenditure assets Total
HK$’000 HK$’000 HK$’000
Cost:
At 1 January 2020 141,526 270,125 411,651
Additions 28,587 177,639 206,226
Exchange adjustment 8,652 16,663 25,315
At 31 December 2020 178,765 464,427 643,192
Additions 4,679 70,154 74,833
Exchange adjustment 2,083 4,173 6,256
At 30 June 2021 (Unaudited) 185,527 538,754 724,281
Accumulated amortisation and
impairment losses:
At 1 January 2020 16,861 17,762 34,623
Amortisation 2,537 5,363 7,900
Impairment 11,815 – 11,815
Exchange adjustment 1,745 1,316 3,061
At 31 December 2020 32,958 24,441 57,399
Amortisation 2,491 2,862 5,353
Exchange adjustment 425 323 748
At 30 June 2021 (Unaudited) 35,874 27,626 63,500
Carrying amount:
At 30 June 2021 (Unaudited) 149,653 511,128# 660,781
At 31 December 2020 (Audited) 145,807 439,986# 585,793
#
The carrying amount of acquired intangible assets as at 30 June 2021 mainly included (i) the project
development cost of an ophthalmic solution containing SkQ1 as its sole active pharmaceutical ingredient of
approximately HK$322.7 million (31 December 2020: approximately HK$296.2 million); and (ii) the project
development cost of a pharmaceutical product that contains an anti-vascular endothelial growth factor (anti-
VEGF) as a drug substance of approximately HK$120.3 million (31 December 2020: approximately HK$73.7
million).
13
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202114. CONVERTIBLE LOAN RECEIVABLES
(i) In 2018, the Group entered into an agreement with an independent third party, DB Therapeutics, Inc (“DBT”), to
subscribe for a convertible loan with principal amount of US$4.5 million (approximately HK$35.3 million) which
carries interest at 5% per annum with maturity on 31 July 2022 (“Convertible Loan A”). The entire principal
amount of Convertible Loan A can be converted into such number of shares representing 45% of the enlarged
and fully diluted share capital of DBT at any time before the maturity date. In the event that no conversion has
been taken place before maturity date, DBT shall repay the Group the outstanding principal amount plus an
amount calculated by the Group which would yield a return for the Group on the principal amount of Convertible
Loan A of 8% per annum. The first tranche in the principal amount of US$0.6 million (approximately HK$4.7
million) (“Tranche A of Convertible Loan A”) was disbursed to DBT in 2018. Tranche A of Convertible Loan A is
classified as financial asset at FVTPL upon the initial recognition.
(ii) In 2019, the Group entered into a convertible loan agreement with an independent third party, a private
company incorporated in Singapore (“Investee”), with principal amount of US$2.0 million (approximately
HK$15.6 million) (“Convertible Loan B”) which would yield a return of 25% per annum for the Group on the
principal amount of Convertible Loan B if no conversion has been taken place before the maturity date (i.e.
5 January 2021). On 4 January 2021, the Group entered into an amendment deed with Investee to extend
the maturity date of Convertible Loan B to 5 November 2022. The Group’s shareholding in Investee upon full
conversion of Convertible Loan B represents 60% of the enlarged and fully diluted share capital of Investee.
Convertible Loan B is classified as financial asset at FVTPL upon the initial recognition.
(iii) In 2019, the Group entered into a convertible loan agreement with an independent third party, 成都上工醫
信科技有限公司 (Chengdu Shanggong Medical Technology Co., Ltd.*) (“Shanggong”), with principal amount
of RMB15.0 million (approximately HK$17.0 million) which carries interest at 10% per annum with maturity
on 1 January 2021 (“Convertible Loan C”). On 23 December 2020, the Group entered into a supplementary
agreement with Shanggong to (i) extend the maturity date of Convertible Loan C to 1 January 2022; and (ii)
adjust the interest rate to 12% per annum. The principal amount of Convertible Loan C can be converted into
such equity interest representing approximately 8.11% of the entire equity interest of Shanggong at any time
before the maturity date. Convertible Loan C is classified as financial asset at FVTPL upon the initial recognition.
(iv) In 2020 and during the six months ended 30 June 2021, the Group made available certain convertible loans
to Antikor Biopharma Limited (“Antikor”) in the aggregate principal amount of US$2.1 million (approximately
HK$16.3 million) which carry interest at 5% per annum with maturity on 30 September 2022 (“Convertible
Loan D”). The aggregate principal amount of Convertible Loan D can be converted into such number of shares
representing 24.10% of the enlarged and fully diluted share capital of Antikor at any time before the maturity
date. Convertible Loan D is classified as financial asset at FVTPL upon the initial recognition.
(v) During the six months ended 30 June 2021, the Group entered into a convertible loan agreement with an
independent third party, Mitotech S.A. (“Mitotech”), with principal amount of US$1.2 million (approximately
HK$9.3 million) which carries interest at 8% per annum with maturity on 15 October 2022 (“Convertible Loan
E”). The principal amount of Convertible Loan E can be converted into such number of shares representing 1%
of the enlarged and fully diluted share capital of Mitotech at any time before the maturity date. Convertible Loan
E is classified as financial asset at FVTPL upon the initial recognition.
14
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202114. CONVERTIBLE LOAN RECEIVABLES (CONTINUED)
The Group’s convertible loan receivables are recognised as follows:
HK$’000
As at 30 June 2021
– Tranche A of Convertible Loan A 5,408
– Convertible Loan B 23,506
– Convertible Loan C 32,415
– Convertible Loan D 21,228
– Convertible Loan E 8,803
Total 91,360
Less: Current portion (32,415)
Non-current portion 58,945
HK$’000
As at 31 December 2020
– Tranche A of Convertible Loan A 5,407
– Convertible Loan B 21,385
– Convertible Loan C 37,027
– Convertible Loan D 11,531
Total 75,350
Less: Current portion (32,916)
Non-current portion 42,434
The movements in fair value of convertible loan receivables classified as level 3 in the fair value hierarchy during the six
months ended 30 June 2021 are as follows:
HK$’000
At 1 January 2021 75,350
Additions 15,140
Change in fair value recognised in profit or loss 406
Exchange differences 464
At 30 June 2021 (Unaudited) 91,360
As at 30 June 2021, the fair values of convertible loan receivables are calculated using Binomial Share Option Model
with the following key assumptions:
Convertible Convertible Convertible Convertible Convertible
Loan A Loan B Loan C Loan D Loan E
Dividend yield Nil Nil Nil Nil Nil
Expected volatility 161% 47% 80% 70% 117%
The key significant unobservable input to determine the fair value of convertible loan receivables is the expected
volatility. A higher in the expected volatility would result in an increase in the fair value of convertible loan receivables,
and vice versa.
15
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202115. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME AND FINANCIAL ASSETS AT
FAIR VALUE THROUGH PROFIT OR LOSS
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
Non-current
Equity investments designated at FVTOCI (Note (a))
– Listed equity investments (Note (b)) 31,547 20,534
– Unlisted equity investments (Note (c)) 46,942 58,040
78,489 78,574
Equity investments designated at FVTPL (Note (d))
– Unlisted equity investments (Note (c)) 7,470 6,338
Current
Equity investments designated at FVTPL (Note (d))
– Listed equity investments (Note (b)) 23 15
Notes:
(a) The equity investments were irrevocably designated at FVTOCI as the Group considers these investments to be
strategic in nature.
(b) The balance as at 30 June 2021 represents one (31 December 2020: one) listed equity security which is listed
on the NASDAQ Stock Market of the United States, namely AC Immune SA. The fair value was based on quoted
market price as at 30 June 2021.
(c) The balance as at 30 June 2021 represents six (31 December 2020: five) unlisted equity investments, namely
the investments in (i) series B preferred stock of a private company incorporated in the United States; (ii) series
C preferred stock and common stock of another private company incorporated in the United States; (iii) equity
interest in Shanggong; (iv) ordinary shares of Antikor; (v) series pre-A preferred stock of a private company
incorporated in Singapore; and (vi) ordinary shares of another private company incorporated in Singapore.
(d) The equity investments were irrevocably designated at FVTPL as the Group considers these investments to be
held for trading.
16
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202115. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME AND FINANCIAL ASSETS AT
FAIR VALUE THROUGH PROFIT OR LOSS (CONTINUED)
The movements in fair value of equity interest in Shanggong classified as level 3 in the fair value hierarchy during the six
months ended 30 June 2021 are as follows:
HK$’000
At 1 January 2021 37,799
Change in fair value recognised in other comprehensive income (4,553)
Exchange differences 475
At 30 June 2021 (Unaudited) 33,721
As at 30 June 2021, the fair value of equity interest in Shanggong is calculated using Value Allocation Model with the
following key assumptions:
Expected volatility 70%
Risk-free interest rate 2.55%
A higher in the expected volatility would result in an increase in the fair value of equity interest in Shanggong, and vice
versa. A higher in the risk-free interest rate would result in a decrease in the fair value of equity interest in Shanggong,
and vice versa.
16. INVENTORIES
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
Raw materials 10,103 8,030
Work in progress 13,726 12,489
Finished goods 102,234 126,517
126,063 147,036
17
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202117. TRADE AND OTHER RECEIVABLES
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
Trade receivables 513,267 463,392
Other receivables 29,915 19,862
543,182 483,254
The Group’s policy is to allow an average credit period of 90 days to its trade customers.
The ageing analysis of trade receivables as at the end of the reporting period, based on the invoice date, is as follows:
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
0–60 days 307,420 267,734
61–90 days 97,898 67,026
Over 90 days 107,949 128,632
513,267 463,392
18. DEPOSITS AND PREPAYMENTS
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
Deposits paid for acquisition of property, plant and equipment 15,634 13,007
Deposits paid for acquisition of other intangible assets (Note) 42,106 41,570
Prepayments for purchase of finished goods 361 18,792
Other deposits 931 1,068
Other prepayments 12,515 9,842
Total 71,547 84,279
Less: Current portion (13,807) (29,702)
Non-current portion 57,740 54,577
Note:
It is a refundable earnest money paid to 西藏林芝百盛藥業有限公司 (Tibet Linzhi Parkson Pharmaceutical Co., Ltd.*)
(“Parkson Pharmaceutical”) in accordance with the framework agreement entered into between Parkson Pharmaceutical
and the Group on 4 June 2020. Subject to the fulfilment of conditions set out in the product interests transfer agreement
dated 9 June 2021, the Group shall pay to Parkson Pharmaceutical the remaining balance of the consideration of
RMB62.0 million. As at the date of this report, Parkson Pharmaceutical has not yet fulfilled the conditions.
18
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202119. TRADE AND OTHER PAYABLES
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
Trade payables 4,289 44,086
Other payables and accruals (Note) 407,856 352,807
412,145 396,893
Note:
Other payables and accruals included the accruals for sales and marketing costs of approximately HK$306.4 million (31
December 2020: approximately HK$284.9 million).
The ageing analysis of trade payables as at the end of the reporting period, based on the invoice date, is as follows:
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
0–60 days 4,283 44,050
61–90 days 6 34
Over 90 days – 2
4,289 44,086
20. BANK BORROWINGS
As at 30 June 2021, the bank borrowings and banking facilities were secured by (i) corporate guarantees provided by
the Company and subsidiaries within the Group; and (ii) a pledged bank deposit of approximately HK$36.8 million.
As at 31 December 2020, the bank borrowings and banking facilities were secured by (i) corporate guarantees provided
by the Company and subsidiaries within the Group; and (ii) a pledged bank deposit of approximately HK$40.2 million.
As at 30 June 2021, the Group obtained banking facilities of approximately HK$734.1 million (31 December 2020:
approximately HK$848.7 million), of which approximately HK$449.8 million (31 December 2020: approximately
HK$434.1 million) was utilised.
21. CONVERTIBLE LOAN PAYABLE
On 6 July 2016, the Group entered into a convertible loan agreement with International Finance Corporation (“IFC”)
in an aggregate principal amount of HK$150.0 million (the “Convertible Loan Payable”). Subject to the terms of the
convertible loan agreement, IFC has the right to convert all or any part of the outstanding principal amount of the
Convertible Loan Payable into shares of the Company at any time prior to the maturity date on 2 August 2021. On 10
July 2020, the Group and IFC entered into an amendment agreement to the convertible loan agreement to extend the
maturity date for a period of 3 years to 2 August 2024. The Group accounted for the extension as a derecognition of the
existing financial liability and the recognition of a new financial liability with a gain recognised on extinguishment, being
the difference between the fair value of consideration given to extinguish the financial liability and its previous carrying
amount.
19
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202121. CONVERTIBLE LOAN PAYABLE (CONTINUED)
The major terms and conditions of the Convertible Loan Payable are as follows:
(i) Interest rate
The outstanding principal amount of the Convertible Loan Payable at 1.9% per annum.
(ii) Conversion price
The conversion price is HK$5.9 per share (subject to anti-dilutive adjustments as set out in the convertible loan
agreement).
(iii) Repayment
The Company shall repay the outstanding principal amount of the Convertible Loan Payable on the maturity
date together with the make whole premium calculated at (i) 6% per annum; or (ii) 8% per annum if there
exists a change of control which occurs when, among others, (a) there is a decrease in the shareholdings of
the Company’s certain shareholders as a group under specified conditions as stipulated in the convertible loan
agreement; (b) certain shareholders of the Company as a group cease to be the single largest direct and indirect
shareholder of the Company; or (c) any person (other than certain shareholders as a group) by itself or through
its affiliates have obtained the power to appoint a majority of the Board.
The fair value of the debt component and the equity conversion component were determined at the issuance/
extinguishment of the Convertible Loan Payable where appropriate. The fair value of the debt component was calculated
using a market interest rate for an equivalent non-convertible bond. The residual amount, representing the value of the
equity conversion component, was included in equity. The make whole premium, being an embedded derivative, was
measured at fair value separately. At the date of issue of the Convertible Loan Payable and at 30 June 2021, the fair
value of the make whole premium was determined by the Directors to be minimal.
The movements of the Convertible Loan Payable are as follows:
Debt Conversion
component component Total
HK$’000 HK$’000 HK$’000
At 1 January 2020 140,159 33,323 173,482
Imputed interest expense 8,174 – 8,174
Interest paid (2,890) – (2,890)
Extinguishment (4,914) (18,096) (23,010)
At 31 December 2020 (Audited) 140,529 15,227 155,756
Imputed interest expense 2,682 – 2,682
Interest paid (1,441) – (1,441)
At 30 June 2021 (Unaudited) 141,770 15,227 156,997
20
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202122. SHARE CAPITAL
Authorised
At 30 June 2021 At 31 December 2020
Number HK$’000 Number HK$’000
(Unaudited) (Unaudited) (Audited) (Audited)
Ordinary shares at HK$0.1 each 1,000,000,000 100,000 1,000,000,000 100,000
Issued and fully paid
Number HK$’000
At 1 January 2020 577,937,000 57,794
Shares repurchased and cancelled (1,034,000) (104)
At 31 December 2020 (Audited) 576,903,000 57,690
Employee share options exercised 320,000 32
Shares repurchased and cancelled (Note) (507,000) (50)
At 30 June 2021 (Unaudited) 576,716,000 57,672
Note:
During the six months ended 30 June 2021, the Company repurchased 485,000 of its shares on the Stock Exchange for
a total consideration of approximately HK$2.2 million which was paid wholly out of retained profits in accordance with
section 257 of the Hong Kong Companies Ordinance. The repurchased shares together with 22,000 shares repurchased
by the end of December 2020 were cancelled during the six months ended 30 June 2021 and the total amount paid for
the repurchase of the shares has been charged to retained profits of the Company.
23. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
The fair value measurement of the Group’s financial and non-financial assets and liabilities utilises market observable
inputs and data as far as possible. Inputs used in determining fair value measurements are categorised into different
levels based on how observable the inputs used in the valuation technique utilised are (the “fair value hierarchy”):
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(i) Financial assets measured at fair value
As at the end of the reporting period, convertible loan receivables and equity investments included in the interim
condensed consolidated financial statements require measurement at, and disclosure of, fair value.
The fair value of financial instruments with standard terms and conditions and traded on active liquid markets
are determined with reference to quoted market prices.
The valuation techniques and significant unobservable inputs used in determining the fair value measurement
of level 2 and level 3 financial instruments, as well as the relationship between key unobservable inputs and fair
value are set out in notes (iii) and (iv) below.
21
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202123. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (CONTINUED)
(ii) Financial instruments not measured at fair value
Financial instruments not measured at fair value include cash and cash equivalents, trade and other receivables,
pledged bank deposit, trade and other payables, bank borrowings, lease liabilities and convertible loan payable.
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables and
current portion of pledged bank deposit, bank borrowings and lease liabilities approximate to their fair values
due to the short term maturities of these instruments.
The fair values of non-current portion of pledged bank deposit, bank borrowings and lease liabilities and
convertible loan payable for disclosure purposes have been determined using discounted cash flow models and
are classified as level 3 in the fair value hierarchy. Significant inputs include the discount rate used to reflect the
credit risks of the borrowers or the Company.
(iii) Information about level 2 fair value measurement
The fair values of the financial instruments included in the level 2 category have been determined with reference
to generally accepted pricing models based on quoted prices for identical or similar assets or liabilities in
markets that are not active.
(iv) Information about level 3 fair value measurement
The fair values of the financial instruments included in the level 3 category as at the end of the current period
have been determined by the Directors with reference to the valuation performed by International Valuation
Limited, an independent firm of professionally qualified valuers, details of which are set out in notes 14 and 15.
The following table provides an analysis of financial instruments carried at fair value by level of the fair value hierarchy:
As at 30 June 2021
Level 1 Level 2 Level 3 Total
Recurring fair value measurement (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Financial assets: HK$’000 HK$’000 HK$’000 HK$’000
Listed equity investments 31,570 – – 31,570
Unlisted equity investments – 20,691 33,721 54,412
Convertible loan receivables – – 91,360 91,360
As at 31 December 2020
Level 1 Level 2 Level 3 Total
Recurring fair value measurement (Audited) (Audited) (Audited) (Audited)
Financial assets: HK$’000 HK$’000 HK$’000 HK$’000
Listed equity investments 20,549 – – 20,549
Unlisted equity investments – 26,579 37,799 64,378
Convertible loan receivables – – 75,350 75,350
There was no transfer under the fair value hierarchy classification during the six months ended 30 June 2021.
22
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 202124. CAPITAL COMMITMENTS
At 30 June At 31 December
2021 2020
(Unaudited) (Audited)
HK$’000 HK$’000
Contracted but not provided for:
– property, plant and equipment 2,617 1,140
– development expenditure 10,960 16,313
– acquired intangible assets 264,898 334,452
– construction of the new factory 193,588 183,234
– expansion of the existing factory 28,124 24,481
500,187 559,620
25. RELATED PARTY TRANSACTIONS
Details of compensation paid to key management of the Group (all being the Directors) are as follows:
For the
six months
ended 30 June
2021 2020
(Unaudited) (Unaudited)
HK$’000 HK$’000
Salaries and other benefits 4,827 2,934
Pension fund contributions 22 14
4,849 2,948
26. APPROVAL OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The interim condensed consolidated financial statements were approved and authorised for issue by the Board on 12
August 2021.
* For identification purpose only
23
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS REVIEW AND PROSPECTS
The vision of Essex Bio-Technology Limited (the “Company”, together with its subsidiaries, the “Group”) is to be
a great and socially responsible corporation. Strategically, the Group develops, manufactures and commercialises
genetically engineered therapeutic recombinant bovine basic fibroblast growth factor (“rb-bFGF”), with established
mechanism of action in cellular proliferation, differentiation and migration.
The Group’s turnover is primarily made up from the segments of Ophthalmology and Surgical (wound care and
healing) covering dermatology, stomatology, obstetrics and gynaecology; while pursuing new therapeutics in
oncology, orthopaedics and neurology through the Group’s enrichment programme.
Currently the Group has six commercialised biologics, formulated with rb-bFGF (collectively referred to as
the “bFGF Series”), that are marketed and sold as Beifushu eye drops, Beifushu eye gel and Beifushu unit-
dose eye drops for treatment of ocular wounds, Beifuji spray, Beifuji lyophilised powder and Beifuxin gel for
treatment of surface wounds, in the People’s Republic of China (the “PRC”). The bFGF Series are developed and
manufactured by the Group, three of which were approved by 國家藥品監督管理局 (National Medical Products
Administration) as Category I biologics and four of which are on the list of the National Drug List for Basic Medical
Insurance, Work-Related Injury Insurance and Maternity Insurance issued by the National Healthcare Security
Administration and the Ministry of Human Resources and Social Security of the PRC. Collectively, the combined
turnover of the bFGF Series represented about 86.4% of the Group’s total turnover for the period under review.
Apart from the bFGF Series, the Group has a portfolio of commercialised preservative-free unit-dose eye drops,
namely Tobramycin Eye Drops, Levofloxacin Eye Drops and Sodium Hyaluronate Eye Drops. During the period
under review, the Group has obtained an approval for the registration and commercialisation of the preservative-
free unit-dose Moxifloxacin Hydrochloride Eye Drops in the PRC. These products are expected to strengthen the
market positioning of the ophthalmology business segment of the Group.
The Group soft-launched in the fourth quarter of 2020 T-Bactum® (anti-microbial oral care product), an in-house
developed best-in-class product from the patented nano emulsion technology, encompassing thymol. T-Bactum®
is manufactured and sold through 武漢伢典生物科技有限公司 (Wuhan Adv. Dental Co., Ltd.*), a wholly-owned
subsidiary of the Company.
Leveraging on its established market access capability, the Group undertakes the promotion and selling of a range
of products, including Xalatan® Eye Drops, Xalacom® Eye Drops, 適麗順® (Iodized Lecithin Capsules*) and 伊血安
顆粒 (Yi Xue An Granules*), to complement the Group’s therapeutics business of Ophthalmology and Surgical.
Building mid-term and long-term growth drivers, the Group maintains a pipeline of multi-project in research and
development (“R&D”) at various stages of clinical programmes, which cover a handful of unit-dose ophthalmic
products and biologics in growth factors and antibody.
Significant Business Development Activities
We are committed to pragmatically investing in new products and technologies to strengthen the Group’s product
and R&D pipeline as near to mid-term growth driver in ophthalmology and long-term plan for new therapeutics in
oncology. Major investments in ophthalmic products are outlined as follows:
24
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021Investments in Ophthalmology
In 2018, the Group entered into a co-development agreement with Mitotech S.A. (“Mitotech”) and Mitotech
LLC for the United States Food and Drug Administration (the “US FDA”) phase 3 clinical trial of an ophthalmic
solution containing SkQ1 for dry eye disease (the “SkQ1 Product”). As disclosed in the announcement of the
Company dated 24 February 2021, positive outcome was achieved during second phase 3 clinical trial (VISTA-2).
The clinical trial study repeated statistically significant positive results on key predefined secondary end-point
(Central Corneal Fluorescein Staining). The board (the “Board”) of directors of the Company (the “Directors”) is
enthusiastic about the read-out of clearing of central staining of the cornea (defined as zero staining in central
cornea), which reveals the potential of SkQ1 in addressing oxidative stress in dry eye diseases, and is looking
forward to seeing the results of the third phase 3 clinical trial (VISTA-3) on the overall regulatory pathway towards
the new drug application submission with the US FDA targeted by Mitotech to be made in the year of 2022 to
2023.
Total actual investment cost of approximately HK$322.7 million for the clinical development of the SkQ1 Product
with Mitotech is presented as “Acquired Intangible Assets” under the Group’s interim condensed consolidated
financial statements as at 30 June 2021. The investment cost represented 12.3% of the Group’s total assets as
at 30 June 2021. According to Frost & Sullivan, the estimated number of patients of moderate-to-severe dry eye
disease is over 117 million in the PRC in 2019. It is expected that the size of the potential market of the SkQ1
Product will be significant.
In 2020, the Group entered into a co-development and exclusive license agreement with Shanghai Henlius
Biotech, Inc. (“Henlius”) to co-develop a pharmaceutical product that contains an anti-vascular endothelial growth
factor (“anti-VEGF”) as a drug substance (the “Anti-VEGF Licensed Product”), which is intended for the treatment
of exudative (wet) age-related macular degeneration (“wet-AMD”). As at the date of this report, the recombinant
anti-VEGF humanised monoclonal antibody injection HLX04-O (“HLX04-O”) for the treatment of wet-AMD has
been approved to commence the phase 3 clinical trial in Australia, the United States, Singapore and European
Union countries such as Hungary, Spain and Latvia. Also, the first patient has been dosed in a phase 1 clinical
study for HLX04-O for the treatment of wet-AMD in the PRC.
Total maximum commitment in relation to the co-development of the Anti-VEGF Licensed Product with Henlius
is US$49.0 million (equivalent to approximately HK$380.5 million). Total actual investment cost of approximately
HK$120.3 million is presented as “Acquired Intangible Assets” under the Group’s interim condensed consolidated
financial statements as at 30 June 2021. The investment cost represented 4.6% of the Group’s total assets as
at 30 June 2021. The Anti-VEGF Licensed Product can be used for treating wet-AMD, diabetic macular edema,
macular edema caused by retinal vein occlusion and myopic choroidal neovascularisation. According to Frost &
Sullivan, the estimated number of patients of these 4 categories of disease is over 15.5 million in the PRC in 2019.
Assuming each patient applies 4 doses in the first year of treatment and 2 to 3 doses in subsequent years, it is
expected that the size of the potential market of the Anti-VEGF Licensed Product will be significant.
On 9 June 2021, the Group entered into a product interests transfer agreement (the “Product Interests Transfer
Agreement”) with 西藏林芝百盛藥業有限公司 (Tibet Linzhi Parkson Pharmaceutical Co., Ltd.*) (“Parkson
Pharmaceutical”) in relation to the acquisition of intellectual property rights relating to technologies and process
of product R&D and production of 適麗順® (Iodized Lecithin Capsules*) and other medicinal products in
different forms in which iodized lecithin serves as an active pharmaceutical ingredient. The consideration of the
acquisition is RMB97.0 million (equivalent to approximately HK$117.6 million). As at the date of this report,
a refundable earnest money of RMB35.0 million (equivalent to approximately HK$42.4 million) was paid to
Parkson Pharmaceutical. It is expected that the acquisition will enable the Group to strengthen the ophthalmology
business. As at the date of this report, Parkson Pharmaceutical has not yet fulfilled the conditions set out in the
Product Interests Transfer Agreement.
Apart from the investments in the SkQ1 Product and the Anti-VEGF Licensed Product, as at 30 June 2021 and the
date of this report, each of the investments made and held by the Group represented less than 5% of the Group’s
total assets.
25
ESSEX BIO-TECHNOLOGY LIMITED
INTERIM REPORT 2021HONOURS AND AWARDS OBTAINED IN 2021
珠海億勝生物製藥有限公司 (Zhuhai Essex Bio-Pharmaceutical Company Limited*), a wholly-owned subsidiary
of the Company, has been included in 2020 年度中國化藥企業 TOP100 排行榜 (2020 top 100 chemical
pharmaceutical companies in the PRC).
The Group’s Beifushu has been awarded as one of the Chinese reputable medicine brands in three consecutive
years. This is a testament of the recognition by the industry for the efficacy and quality of our flagship biologic
drug.
MARKET DEVELOPMENT
Over the years, the Group has been relentlessly investing in establishing and strengthening its market access
capability. As at 30 June 2021, the Group maintains a network of 43 regional sales offices in the PRC and a total
number of about 1,280 sales and marketing representatives, out of which 64% are full-time employees and 36%
are on contract basis or from appointed agents. The Group expanded its presence in Singapore in 2020 as a
strategic base for market access expansion into Southeast Asian countries.
During the period under review, the Group’s therapeutic products are being prescribed in more than 9,760
hospitals and medical providers, coupled with approximately 2,100 pharmaceutical stores, which are widely
located in the major cities, provinces and county cities in the PRC.
For achieving a sustainable traction on growth for currently marketed products as well as for near-term to mid-term
new products being commercialised, the Group initiated investments to improve its competitiveness and widen its
customers base under the following plans:
• Investing in clinical observation programmes for affirming additional clinical indications of its
commercialised products;
• Reaching out to market in lower-tier cities;
• Cultivating pharmaceutical stores, where possible, as complementary sales channel; and
• Building on-line platform for medical consultation and e-prescription for patients with chronic diseases
under its healthtech initiative.
RESEARCH AND DEVELOPMENT
The Group renewed its R&D’s vision in 2020, emphasising the dedication to science and innovation, with a
mission to develop therapeutics that would meet unmet clinical and/or commercial needs. The Group concurrently
kick-started a 5-year (2021 to 2025) R&D’s development plan to further strengthen its R&D capability and its
position in ophthalmology.
The Group’s key R&D initiatives comprise of growth factor, antibody (i.e. mAb, bsAb, sdAb, scFv, ADC/FDC, etc.),
drug formulation know-how and Blow-Fill-Seal (“BFS”) platform. Growth factor, antibody and drug formulation
know-how are used for the development of therapeutic drugs in ophthalmology, surgical (wound care and healing)
and oncology, whereas BFS platform is a state-of-the-art manufacturing facility for producing preservative-free
unit-dose drugs, in particular for ophthalmic drugs.
26
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INTERIM REPORT 2021You can also read
